rss_2.0IZA Journal of Labor Economics FeedSciendo RSS Feed for IZA Journal of Labor Economics Journal of Labor Economics 's Cover of work requirements for food assistance eligibility on disability claiming<abstract> <title style='display:none'>Abstract</title> <p>Between 2010 and 2017, 42 U.S. states added work requirements as a food assistance eligibility criterion for Able-Bodied Adults Without Dependents (ABAWDs). Another U.S. public assistance program, Supplemental Security Income (SSI), provides food assistance without a work requirement, along with cash transfers and health insurance. Therefore, individuals for whom working is difficult may be induced to opt out of the labor force and into SSI in order to maintain access to food assistance. This study is the first to examine whether work requirements associated with food assistance eligibility lead to an increase in SSI applications and receipts. Based on difference-in-differences and event study analyses of comprehensive administrative claims data from the Social Security Administration and survey data from the Current Population Survey, this study finds evidence of lagged effects on SSI applications overall, and reduced Supplementary Nutritional Assistance Program (SNAP) receipts followed by a delayed smaller increase in SSI receipts among individuals with self-reported disabilities. While most SSI applications induced by SNAP-related work requirements appear to be unsuccessful, a small, vulnerable population may move out of the workforce and into SSI in response to the implementation of work requirements.</p> </abstract>ARTICLE2022-02-19T00:00:00.000+00:00Enrolling at university and the social influence of peers<abstract> <title style='display:none'>Abstract</title> <p>This article studies peer effects on the decision to enroll at university. To determine the social influence of peers, we use a measure encompassing the two major dimensions of social influence in the classroom: the ability and capacity of peers to exchange information about study options. This paper uses French administrative data on the universe of first year applicants to a single university over seven consecutive cohorts. We exploit idiosyncratic variations in the proportion of peers advised to change their educational choice. We find that our variable of interest has a small but negative and significant effect on the individual decision to attend university and observe stronger peer effects among groups of students of similar gender or socio-economic background. We also find a weaker impact of the proportion of peers advised to change their educational choice on the individuals of higher level of academic ability.</p> </abstract>ARTICLE2022-02-01T00:00:00.000+00:00Survey vs Scraped Data: Comparing Time Series Properties of Web and Survey Vacancy Data<abstract><title style='display:none'>Abstract</title><p>This paper studies the relationship between a vacancy population obtained from web crawling and vacancies in the economy inferred by a National Statistics Office (NSO) using a traditional method. We compare the time series properties of samples obtained between 2007 and 2014 by Statistics Netherlands and by a web scraping company. We find that the web and NSO vacancy data present similar time series properties, suggesting that both time series are generated by the same underlying phenomenon: the real number of new vacancies in the economy. We conclude that, in our case study, web-sourced data are able to capture aggregate economic activity in the labor market.</p></abstract>ARTICLE2019-09-13T00:00:00.000+00:00Why Cash Transfer Programs Can Both Stimulate and Slow Down Job Finding<abstract><title style='display:none'>Abstract</title><p>This article analyzes the behavioral effects of cash transfer programs when jobless people need to have access to a minimum consumption level. Our model reconciles recent evidence about negligible or favorable effects of cash transfers on job-finding rates and the more standard view of negative effects. When unemployment compensation, if any, is low enough, we argue that cash transfer programs can raise the hiring probability. Our framework is flexible enough to generate the standard conclusion as well. Looking specifically at unemployment compensation, its optimal level is generally higher than when a lower bound on consumption is ignored.</p></abstract>ARTICLE2019-11-27T00:00:00.000+00:00Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics<abstract><title style='display:none'>Abstract</title><p>Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate, but the existing literature has emphasized the need to take into account the growing importance of worker composition effects, especially during downturns. This paper seeks to understand the role of firm heterogeneity for aggregate wage dynamics with reference to the Italian case. Using a newly available dataset based on social security records covering the universe of Italian employers between 1990 and 2015, we document that firm composition effects increasingly matter in explaining aggregate wage growth and largely reflect shifts of labor from low-paying to high-paying firms, especially in the most recent years. We find that changes in reallocation of workers across firms accounted for approximately one-fourth of aggregate wage growth during the crisis.</p></abstract>ARTICLE2019-08-01T00:00:00.000+00:00Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland<abstract><title style='display:none'>Abstract</title><p>This paper examines the impacts of the introduction of the UK National Minimum Wage (NMW) in 1999 and the introduction of the UK National Living Wage (NLW) in 2016 in Northern Ireland (NI) on employment and hours. NI is the only part of the UK with a land border where the NMW and NLW cover those working on one side of the border but not those working on the other side of the border (i.e., Republic of Ireland). This discontinuity in minimum wage coverage enables a research design that estimates the impacts of the NMW and NLW on employment and hours worked using difference-in-differences estimation. We find a small decrease in the employment rate of 22–59/64-year-olds in NI, of up to 2% points, in the year following the introduction of the NMW, but no impact on hours worked. We find no clear evidence that the introduction of the NLW impacted either employment or hours worked in NI.</p></abstract>ARTICLE2019-07-17T00:00:00.000+00:00Parents with an Unemployed Adult Child: Consumption, Income, and Savings Effects<abstract><title style='display:none'>Abstract</title><p>The risk of labor market, health, and asset-value shocks comprise profound retirement savings challenges for older workers. Parents, however, may experience added risk if their children experience adverse labor market shocks. Prior research has shown that parents support their children financially through an unemployment spell. In this paper, we also provide evidence of financial support from parents and investigate if this financial support is accompanied by adjustments to parental consumption, income, or savings behavior. With longitudinal data on mothers and children from the Panel Study of Income Dynamics, we use within-mother variation in behavior to identify the effect of a child’s labor market shock on parent outcomes. We find evidence of a decline in consumption, an increase in labor supply, and a decrease retirement savings, though the results are heterogenous among mothers. Our results point to aggregate inefficiencies and inequities that may result from family risk sharing.</p></abstract>ARTICLE2019-07-05T00:00:00.000+00:00Technical Education, Non-cognitive Skills and Labor Market Outcomes: Experimental Evidence from Brazil<abstract> <title style='display:none'>Abstract</title> <p>This paper describes the results from an evaluation of a public policy that offers scholarships to current and former public high school students, so that they can attend technical and vocational education courses free of charge. We use a waiting list randomized controlled trial in four municipalities in a southern Brazilian State (Santa Catarina) to quantify the effects of the program on school progression, labor market outcomes and non-cognitive skills. Our intention-to-treat estimates reveal substantial gender heterogeneity two years after program completion. Women experienced large gains in labor market outcomes and non-cognitive skills. Employment rose by 21 percentage points (or approximately 33%) and the gains in earnings are of more than 50%. Also, women who received the offer scored 0.5<italic>σ</italic> higher on the synthetic index of non-cognitive skills and 0.69<italic>σ</italic> higher on an extraversion indicator. We find no effects on the male sub-sample. These findings corroborate the evidence on gender heterogeneity in the labor market effects of technical and vocational education programs. We also perform a series of exercises to explore potential channels through which these effects arise.</p> </abstract>ARTICLE2021-03-03T00:00:00.000+00:00The effects of recreational cannabis access on labor markets: evidence from Colorado<abstract> <title style='display:none'>Abstract</title> <p>Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.</p> </abstract>ARTICLE2021-11-25T00:00:00.000+00:00The unequal impact of raising the retirement age: Employment response and program substitution<abstract> <title style='display:none'>Abstract</title> <p>Using high-frequency Italian administrative data, the author studies the heterogeneous effects of a reform raising the normal retirement age (NRA) from 60 years to 65 years for private-sector male employees. The analysis, based on a difference-in-differences (DD) method, shows that the NRA raise reduces pension benefit claims but does not lead to a one-to-one increase in the employment rate since workers also apply for more disability and unemployment benefits. Moreover, most of them simply retire without any benefit. The extent of the effects varies substantially across socio-economic groups, as individuals with poorer health, with lower occupational grades and lower pay levels are the most constrained by the reform, experiencing the highest delay in pension claims, increase in employment, and inactivity. All in all, this paper shows that raising the NRA could have unintended effects as it affects more negatively the most vulnerable in the labor market.</p> </abstract>ARTICLE2021-09-21T00:00:00.000+00:00Business Income Dynamics and Labor Market Fluidity<abstract> <title style='display:none'>Abstract</title> <p>The share of the U.S. population that receives business income has increased substantially in recent decades. At the same time, worker hire and separation rates declined, with worrying implications for productivity and wage growth. In this paper, we explore the relationship between business income (BI) receipt and labor reallocation. We show that BI recipients are largely excluded from existing measures of labor reallocation. Including BI recipients reduces the measured decline from 1994 to 2014 in the hire and separation rates by 8.3–8.7%, respectively, primarily among jobs that were secondary sources of income or short in duration. We present evidence that worker transitions between wage and salary jobs and BI represent labor reallocation, as opposed to reclassification of employees as independent contractors.</p> </abstract>ARTICLE2021-10-18T00:00:00.000+00:00The bilingual gap in children's language, emotional, and pro-social development<abstract> <title style='display:none'>Abstract</title> <p>In this paper we examine whether – conditional on other child endowments and family inputs – bilingual children achieve different language, emotional, and pro-social developmental outcomes. Our data, which allow us to analyze children's development in a dynamic framework, are extracted from the UK Millennium Cohort Study (MCS). We model the development production functions for bilingual children using cumulative value-added specifications, which account for parental investments and children's own ability. Analysis based on child age confirms that bilingual children initially have worse language skills than their monolingual peers. The commencement of schooling appears to attenuate these differences, and by age seven, bilingual children have a developmental advantage. We find evidence of a positive relationship between bilingualism and some aspects of emotional development, and it is mainly boys who appear to benefit from their bilingual background.</p> </abstract>ARTICLE2021-01-29T00:00:00.000+00:00Minimum wages in monopsonistic labor markets<abstract><title style='display:none'>Abstract</title><p>Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the United States. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this article, I estimate the effects of the minimum wage for the United States under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of −0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and in controlling for possible external shocks and omitted variables.</p></abstract>ARTICLE2020-11-12T00:00:00.000+00:00Who helps the unemployed? Workers’ receipt of public and private transfers<abstract><title style='display:none'>Abstract</title><p>I use longitudinal data from the Panel Study of Income Dynamics (PSID) to measure the extent to which an unemployment spell increases the likelihood that a worker receives a cash transfer from family. I examine the prevalence of cash transfers from family, the demographic distribution of unemployed receivers, and the variation between family supported and not family supported spells. I further investigate how this informal, private assistance relates to public transfers from Unemployment Insurance using state-by-year variation in the UI program. I find that unemployment increases the probability a worker receives financial assistance from their family, inclusive of all demographic subgroups, that family cash transfer receipt is growing over time, and is weakly related to UI availability.</p></abstract>ARTICLE2020-08-17T00:00:00.000+00:00Cities drifting apart: Heterogeneous outcomes of decentralizing public education<abstract><title style='display:none'>Abstract</title><p>Looking at the decentralized provision of public education in a middle-income country, this paper estimates the impact of local autonomy on service quality, finding large heterogeneity in the effect across different levels of local development. In the year 2002, Colombian municipalities were entrusted with autonomous management of their local public education based solely on a population threshold. I estimate the impact that autonomy has had on education performance across the territory, using a municipality and time fixed-effects model. I find a quality gap arising between highly developed and low-developed autonomous municipalities, in a trend that reinforces over time: the reform has induced regional inequality in education quality. I am able to support the hypothesis that autonomous and nonautonomous municipalities were on similar performance trends before decentralization was implemented, even when looking within different local development ranges. Based on the analysis of detailed municipal balance sheet data and administration indicators, I argue that local administration capacity represents the most likely explanation of why the autonomy-related discrepancies have been arising.</p></abstract>ARTICLE2020-04-29T00:00:00.000+00:00No extension without representation? Evidence from a natural experiment in collective bargaining<abstract><title style='display:none'>Abstract</title><p>In many countries, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the sector. This paper analyzes the causal impact of extensions using a natural experiment in Portugal that resulted in a sharp and unanticipated decline in the extension probability of agreements. Our results, based on a regression discontinuity design, indicate that extensions had a negative impact on employment growth. This effect is concentrated among nonaffiliated firms, which may reflect the limited representativeness of employer associations.</p></abstract>ARTICLE2020-08-20T00:00:00.000+00:00Decomposition of co-worker wage gains<abstract><title style='display:none'>Abstract</title><p>We address the presence, magnitude, and composition of wage gains related to former co-workers and discuss the mechanisms that could explain their existence. Using Hungarian linked employer–employee administrative data and proxying actual co-workership with overlapping work histories, we show that the overall wage gain attributable to former co-workers consists of multiple elements: a contact-specific, an individual-specific, a firm-specific and a match-specific component. Former co-workers, besides the direct effect of their presence, may funnel individuals into high-paying firms, enhance the sorting of good quality workers into firms, and may contribute to the creation of better employer–employee matches. By introducing and applying a wage-decomposition technique, we demonstrate that there are non-negligible differences between linked and market hires in all empirically separable wage elements. By focusing on specific scenarios, we provide additional empirical evidence in favor of employee referral and information transmission as the main drivers of co-worker gains.</p></abstract>ARTICLE2020-11-30T00:00:00.000+00:00The Earning Losses of Smokers<abstract><title style='display:none'>Abstract</title><p>Using within-family variation from twins and siblings, I find that smokers earn approximately 16% less than nonsmokers. Possible explanations for this earning difference are addiction-related productivity declines and earning reductions from higher health insurance costs. To investigate further, I use variation in the provision of employer-supplied health insurance (ESHI) to examine the mechanism of whether the addiction or insurance component has a larger influence on earnings. While I generally observe a larger earning penalty for smokers with ESHI than smokers without ESHI, the earning difference is statistically indistinguishable from zero.</p></abstract>ARTICLE2020-03-30T00:00:00.000+00:00Employment protection legislation, labor courts, and effective firing costs<abstract><title style='display:none'>Abstract</title><p>In many countries, labor courts play a central role in the determination of firing costs by monitoring and supervising the procedures for dismissals, and, eventually, deciding severance payments mandated by the employment protection legislation (EPL). To get some insights about the impact of labor courts on effective firing costs, we explore a new database that contains information on labor courts’ intervention in firings before and after the implementation of significant EPL reforms modifying severance payments and procedures for dismissals. Our results suggest that labor court rulings on economic dismissals did not fully translate the reduction of firing costs mandated by the new EPL to effective firing costs.</p></abstract>ARTICLE2020-03-30T00:00:00.000+00:00Assortative preferences in choice of major<abstract><title style='display:none'>Abstract</title><p>The primary objective of this study is to examine the contribution of available information constrained by parents’ fields of study to the observed assortative preferences in their children’s choice of major. Comparable to panel models, we define within-family transmission functions with 1-to-2 matches (1 for each parent). Using the confidential major file of the 2011 National Household Survey from Canada, the results show that children’s choice of field of study exhibits significant assortative preferences isolated from ability sorting and unobserved differences across majors and other family characteristics. With some caution, we attribute this persisting assortative tendency to the information asymmetry across alternative majors built on by parents’ educational backgrounds within families.</p></abstract>ARTICLE2020-09-16T00:00:00.000+00:00en-us-1